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The Crisis in the International Trading System

After 15 years the WTO is not functioning as envisioned and is faced with many new trade challenges − climate change, terrorism, pandemics, genetically modified organisms, food safety − which it is ill-equipped to handle. Conflict, Chaos and Confusion sheds light on this deep and acute crisis, focusing on contentious and complex new trade issues and how they will affect international trade in the future.

Chapter 17: The Changing Nature of Protectionism: Are ‘Free Traders’ Up to the Challenges it Presents?

Monograph Chapter

Extract

In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it the cheapest. The proposition is so very manifest, that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question, had not the interested sophistry of merchants and manufacturers confounded the common sense of mankind. Their interest is, in this respect, directly opposite to that of the great body of the people. As it is the interest of the freemen of a corporation to hinder the rest of the inhabitants from employing any workmen but themselves, so it is the interest of the merchants and manufacturers of every country to secure to themselves the monopoly of the home market. Hence … the extraordinary duties upon almost all goods imported by alien merchants. Hence the high duties and prohibitions upon all those foreign manufactures which can come into competition with our own. Adam Smith, 17761 1. INTRODUCTION When Adam Smith turned his sights on protectionists, there was no doubt about who the targets were and the vested interest they had in obtaining (or retaining) relief from having to compete with imports.2 Those seeking protection were primarily businessmen (including the owners of agricultural land) whose ability to compete with imports was declining. Those defending existing protection were firms whose profitability, and possibly survival, would be threatened if foreign alternatives were given unfettered access to their home market....

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